Mortgage lending strengthens slightly
February’s net mortgage lending strengthened, reflecting some increase in the banks’ market share as a result of recent strong remortgaging, according to the British Bankers’ Association (BBA).Credit card lending remained subdued, while personal deposits continued with above-average growth. Lending to financial companies returned to trend having been inflated in January.
BBA statistics director, David Dooks, said of the latest data: “In an environment of tightening lending criteria, re-mortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share.
Despite the relative pick-up in February’s reported retail sales, consumer credit and cards in particular, continued to be subdued.”
Gross lending was slightly weaker than January but stronger than the recent average partly reflecting very strong remortgaging approvals, which feed through to gross lending much sooner than approvals for house purchase.
Net mortgage lending was stronger in February, reflecting lower repayments. The annual growth rate has stabilised around 13% in recent months.
The pattern of house purchase approvals numbers has changed markedly in the last few months with the share of remortgaging now close to half of all approvals.
By contrast house purchase approvals have been fairly constant and low for the last five months and despite ticking up slightly in February loans for equity withdrawal have continued to trend downwards.
Annual growth in credit card borrowing fell back slightly to +5.8% as repayments continued to outstrip new spending as they did throughout 2007.
Annual growth in loans and overdrafts rose slightly to +5.3%. However overdrafts outstanding declined a little further in February and are at their lowest level since April 2006.
Personal deposits have continued to show signs of recovery in early 2008 and are largely in line with the longterm average.